By Dorothy Atkins · Listen to article
Law360 (August 23, 2023, 3:31 PM EDT) -- With Donald Trump's legal bills mounting into eight figures and Rudy Giuliani reportedly pleading with the former president to cover legal expenses, experts say the election interference indictments offer a healthy reminder that white collar attorneys should structure fee arrangements to get paid up front as much as possible, and never confuse publicity with cash.
Matt Chester, chair of Baker Donelson Bearman Caldwell & Berkowitz PC's government enforcement and investigations group, told Law360 that criminal defense attorneys typically structure client fee agreements on an hourly basis or a flat fee. But in high-profile cases, it's important that defense attorneys appropriately budget for what may be a "long-haul and expensive" legal fight, Chester said.
Complex white collar cases involving charges of health care fraud, financial fraud and public corruption typically require significant document review and discovery, numerous witness interviews and pretrial motions leading up to trial, all of which can be long and costly, he said.
"These matters can be expensive, and getting an agreement up front with the client on payment of those fees is important," he said.
Criminal defense attorney Richard Kaplan of Kaplan Marino PC, who's represented clients in high-profile cases like the "Varsity Blues" admissions scandal, told Law360 that myriad factors go into determining the best fee practice for any particular criminal case.
"Client expectations weigh heavily on the potential fee structure," Kaplan said. "Is the client considering cooperating? Are they just looking for the best deal? Is trial the only option? Flat fees can be troublesome, if the client and attorney are not on the same page."
Kaplan also noted that if a potential client is known for not paying their lawyers, then criminal defense attorneys should increase their initial retainer knowing that they may not receive any more money.
Trump's legal predicament provides an extreme case study in how quickly legal bills can pile up. Facing four criminal indictments in three states and the District of Columbia, totaling 91 felony counts, and with no trial imminent, the former president has already paid out $27 million in legal expenses during the first six months of 2023 through various political action committees, according to The New York Times.
Those fees are in addition to $16.9 million in legal expenses that Trump's Save America PAC spent last year, according to its public financial documents posted on the nonprofit Open Secrets' database.
Meanwhile, Trump's onetime lawyer and co-defendant Rudy Giuliani is reportedly saying he is strapped for cash and struggling to afford his mounting legal costs. The New York Times and other outlets reported that Giuliani went to Florida in late April to personally plead with the former president for help with legal expenses related to the criminal investigations.
Criminal defense attorney Brian Tannebaum of Tannebaum Law, who has represented high-profile clients like the former chief financial officer of convicted Ponzi schemer Scott Rothstein's law firm, said criminal defense attorneys representing high-profile clients in federal criminal cases should not agree to small monthly payments or payments upon invoice, especially if a client has a reputation for not paying bills.
"Anyone mentoring a criminal defense lawyer will say ... 'Get it all up front,'" he said. "If the fee is several million dollars that may be difficult, but it should be the goal."
Tannebaum added that if clients can't pay for their legal defense up front, there should be a significant payment in advance or a guaranteed payment structure. However, he noted that such arrangements are rare given that directors and officers liability insurance and employers typically don't cover criminal defense fees.
Beware Getting Stuck Representing a Client Who Can't or Won't Pay
Up-front fee agreements are particularly important, according to Chester, because federal judges presiding over criminal disputes likely won't let attorneys withdraw solely due to unpaid legal fees if they have been representing the client for a while.
"In the view of the courts, allowing withdrawal results in delays, which can impact, among other things, speedy trial rights," he said.
Tannebaum said state judges are more flexible in letting criminal defense attorneys withdraw for lack of payment, but in a high-profile case, "don't count on a judge letting you out after many months of representing the client."
In most jurisdictions, building in a creative fee arrangement, such as by incorporating a "success" fee or contingency fee into the hourly fee or flat fee agreement, may violate professional ethical rules, according to the attorneys.
That's because criminal defendants have the sole discretion to decide how to respond to criminal charges by reaching a plea agreement, pleading guilty or heading to trial, Chester said.
Also, the American Bar Association's Model Rule 1.5(d)(2) prohibits contingent fee arrangements in criminal cases.
Even so, Tannebaum recalled that he's had clients try to offer him a "bonus" if they received a certain result, although none of them actually ever paid.
"Bottles of wine, gift baskets have been received, but no bonus," he said.
Lowering Your Fees To Land a High-Profile Case Is a "Terrible Idea"
Chester noted there are also "certain intangibles" — like publicity garnered from a high-profile case that could bring in future business — which may provide an incentive for less-experienced attorneys to lower their rates in fashioning a fee arrangement.
However, that calculation isn't simple, because taking on a high-profile case may have other future costs, like barring the attorney from taking on other clients due to potential conflicts, Chester said.
"It is no different than, for instance, reducing reasonable and customary hourly rates for corporate clients with the understanding that the client may seek to award a certain volume of business to those attorneys in the future," Chester said.
Kaplan also cautioned that publicity from high-profile cases "cuts both ways." Although the publicity may boost a firm's business, the case could draw heightened criticism and lead a firm and client to imprudently second-guess their legal strategies, he said.
Tannebaum acknowledged that some defense attorneys will want the publicity and take on high-profile cases at a lower fee, but he said that, generally, is "a terrible idea."
"The work is immense, as is the pressure," he said. "While a lawyer may feel an initial buzz after taking a high-profile case, the work is ahead, and the excitement of taking a high-profile case quickly wears off."
Representing high-profile clients typically requires more work than normal, he said, because taking on such a case likely involves interacting with the media, which "is work in itself, even for lawyers who don't speak to the media."
"Clients often want responses, and educating clients about the best way to handle media inquiries takes time, especially in a high-profile case where the inquiries are daily," he said.
Trump's various indictments again provide a case study in how much extra time a high-profile client can consume. The Wikipedia page for the "Full Ginsburg" features 34 entries since the term was coined in 1998, when William H. Ginsburg, then representing Monica Lewinsky, appeared on all five American Sunday morning talk shows. Two of those entries are for attorneys representing Trump.
That kind of media attention has value for an attorney, but it also takes time and poses risks. Giuliani recently conceded making "defamatory per se" statements about two Georgia poll workers he accused of committing ballot fraud to rig the 2020 election in favor of President Joe Biden. He made the statements as he represented Trump on podcasts and during appearances as a guest commentator on right-wing cable network One America News.
Aside from the media, there may be other individuals who have a stake in the outcome of the case, like a criminal defendant's managers, co-workers or agents, and they will also likely want to be updated regularly about the status of the case, which takes time, Tannebaum said.
"There is much more work than just researching, writing and going to court and arguing," he said. "There is much more time required representing a high-profile client, and that needs to be considered in quoting a fee."
Tannebaum added that when defense attorneys take a high-profile case, sometimes they have to decline other business at a cost not only in not taking the other case but also in developing a reputation that he or she is not available.
Ultimately, defense attorneys need to take all of those factors into account when calculating their fee structure, Tannebaum said.
"A lawyer never knows where a case is going to go," he said. "A client may say at the beginning that they are going to trial no matter what — three months later, there's a plea. A lawyer needs to be prepared to go to a jury verdict and not quote a fee that will lead [a client] to bankruptcy should the case last a year and a half instead of four months."
--Editing by Robert Rudinger and Brian Baresch.